Answer:
The maximum mortgage payment (PITI) a lender would allow for a conventional loan based on the housing expense ratio is:
$1,506.40
Explanation:
a) Data and Calculations:
Lisa works 40 hours at $18 an hour
Lisa weekly income = 40 * $18 = $720
Lisa monthly income = 40 *$18 * 4 = $2,880
Dave weekly income = $625
Dave's monthly income = $625 * 4 = 2,500
Total joint monthly income = $5,380
b) If Lisa and Dave, her husband, file jointly for taxes, then the maximum mortgage payment (PITI) they can make is 28% of the gross income.
Therefore PITI = $5,380 * 28% = $1,506.40
c) The housing expense ratio is the percentage of your gross monthly income devoted to housing expenses, which should not exceed 36% of your monthly or annual gross income. According to the general rule, the household expense payments, primarily rent or mortgage payments, cannot exceed more than 28% of the monthly or annual income.
